Site Mobile Navigation

Former Siemens Executives Are Charged With Bribery

WASHINGTON — Shell companies, Swiss bank accounts, double-crossing middlemen and cash being smuggled across borders were all part of a decade-long bribery scheme aimed at helping Siemens, the German industrial giant, secure a $1 billion contract to produce national identity cards for Argentina, the Justice Department said Tuesday.

Eight former executives and contractors of Siemens were charged on Tuesday with criminal bribery in the case, the department said. According to the indictment, the men conspired to pay more than $100 million in bribes to “high-level Argentine officials” in violation of the Foreign Corrupt Practices Act. Among those indicted was Uriel Sharef, who from July 2000 to July 2007 was a Siemens managing board member, a position just below the rank of chief executive.

Roughly $60 million in bribes were paid in the case, a Justice Department official said.

The cases were filed in United States District Court in Manhattan. The Justice Department said that at least $25 million of the bribes were funneled through United States institutions, giving criminal authorities here jurisdiction. Siemens began issuing financial securities in the United States in 2001, giving the Securities and Exchange Commission jurisdiction over the $31 million in bribes that are said to have been paid after that time. Siemens has about 60,000 employees in the United States.

The indictment documents “a stunning level of deception and corruption,” said Lanny A. Brewer, an assistant attorney general. “Business should be won or lost on the merits of a company’s products and services, not the amount of bribes paid to government officials.”

In 2008, Siemens and its Argentine subsidiary pleaded guilty to criminal violations of the corrupt practices act, agreeing to pay fines of $448.5 million and $500,000, respectively. At the same time, the companies paid an additional $1.15 billion to settle charges brought by the S.E.C. and the Office of the General Prosecutor in Munich.

On Tuesday, the S.E.C. also announced civil bribery charges against seven former Siemens executives, six of whom were also named in the criminal indictment. Robert Khuzami, director of enforcement for the S.E.C., said the case was important because “one of most critical functions of law enforcement is to communicate to companies and individuals that they’re not dupes for obeying the law.” By enforcing the corrupt practices act, he added, “we reward those companies who refuse to pay bribes,” and “root out competitors who do stoop to those levels.”

In both the criminal and civil cases, the individuals were charged with having paid bribes beginning in 1996 to secure the contract and, later, to overcome the Argentine government’s suspension of the project in 2001. The authorities charged that bribes continued to be paid for another six years to a different administration in Argentina in a failed effort to overturn the suspension.

Mr. Brewer said that the cooperation of Siemens corporate officials was “outstanding and extraordinary,” adding that it “played a large role in how we approached this matter.” American authorities also cooperated with the Munich prosecutor’s office in bringing the charges. One of the men charged by the S.E.C., Bernd Regendantz, settled the S.E.C.’s charges by paying a $40,000 fine without admitting to or denying the charges. Mr. Regendantz was not charged in the criminal indictment. The other individuals, who range in age from 51 to 79, are not in custody and are living abroad. United States officials said they were working with foreign governments to bring the individuals to the United States to face the criminal charges.

According to the indictment, the 10-year scheme involved cash payments from a Swiss bank account to Argentine government officials who were not named in the indictment but were classified as unindicted co-conspirators. One of the defendants, Ulrich Bock, a former senior executive of Siemens Business Services, smuggled $10 million in cash across the Swiss border in 1999 to set up the accounts, according to the indictment.

In early 2003, after the Argentine government suspended the project, one of the middlemen, Carlos Sergi, warned Siemens executives that failure to pay outstanding bribe obligations “might well be detrimental to the image of the corporation and its managers” and cause him to expose the bribery scheme, according to the charges.

An error has occurred. Please try again later.

You are already subscribed to this email.

Nine individuals were charged in the civil and criminal cases in the United States. Eight of those, including Mr. Sharef, Mr. Bock and Mr. Sergi were charged in the criminal case: Herbert Steffen, former chief executive of Siemens Argentina; Andres Truppel, former chief financial officer of that company; Stephen Signer and Eberhard Reichert, former senior executives of Siemens Business Services; and Miguel Czysch, who also served as an intermediary in the purported scheme.

Aside from Mr. Reichert and Mr. Czysch, each of those individuals was also charged in the S.E.C. case, which also included Mr. Regendantz.

A lawyer in Germany who represents Mr. Steffen said his client was “astonished and shocked” by the indictment. “We didn’t know about any lawsuits in New York and are finding it very strange that we weren’t even contacted about this,” said Steffen Ufer, a lawyer at Ufer Knauer in Munich, who represents Mr. Steffen. A spokeswoman for the Justice Department said targets of investigations or indictments often were not notified until charges were filed.

Nicholas M. De Feis, a New York attorney representing Bernd Regendantz, who settled charges in the S.E.C. case, said his client “acted honorably” in helping with the investigation of the case.

Lawyers representing the other defendants were not available for comment or declined to comment.

Julia Werdigier contributed reporting from London and Jack Ewing from Frankfurt.

A version of this article appears in print on December 14, 2011, on Page B4 of the New York edition with the headline: Former Siemens Executives Are Charged With Bribery. Order Reprints|Today's Paper|Subscribe